It’s a rather natural tendency among many in the management ranks: the temptation to hold on to star performers in current roles, rather than encouraging their promotions, succession plans or transfers to other areas of the company.
Yet clinging tightly to good people isn’t always the wisest strategy, concludes a recent study. Such talent hoarding, as it’s commonly known, occurs regularly at more than half of 665 employers surveyed in 2016 by the Institute for Corporate Productivity (i4cp), a human capital research firm based in Seattle.
Interestingly, that proportion rose to 74 percent for the lowest-performing companies in the survey, as defined by profit and revenue measures. Bottom line: There is a relationship between stifling career paths and achieving higher levels of sustainable engagement and, ultimately, better organizational performance.
How Hoarding Begets Turnover
On top of that, there are plenty of related negatives associated with hoarding the cream of the crop.
For one thing, it can actually increase turnover among high-potential employees and promising millennials. And that in turn, can lead to other key people leaving the organization. For example, 70 percent of employees who are identified as high-retention risks by their employers say they must leave their current company in order to advance their careers, compared with only about 30 percent of low-risk employees, according to a recent global workforce study by Willis Towers Watson.
“Hoarding inevitably results in key people leaving – a problem aggravated by today’s mobile millennial workers and strong economy,’’ says Kevin Martin, i4cp’s chief research officer and study co-author. The issue persists because managers are rarely rewarded for moving individuals to different units, he adds. “This lack of accountability is a killer,” he says.
Acknowledging the Trend
Because more than one-quarter of employees are generally deemed to be in a high-retention-risk category in any organization, and many are top performers or high potentials with critical skills, the talent hoarding problem is escalating. As a result, more companies today are now fessing up to the risks that the practice can pose – and are focusing large-scale efforts toward “anti-hoarding,” experts say.
Example: Financial services company Ally Financial Inc., based in Detroit, rolled out a more talent-focused business strategy, specifically geared to giving high performers a chance to dramatically stretch their skills and take on leadership roles earlier in their careers.
To discourage talent hoarding, the company holds “career roundtables,” where executives review potential internal candidates for promotional vacancies. Additionally, staff can pitch their qualifications and lobby senior managers with imminent openings.
To take part, employees must have strong performance reviews and have more than a year in their current role. In the last two years, 11 finance employees landed higher jobs or made lateral moves following these roundtable presentations, Ally reports.
“Giving good people big jobs early and adding a lot of accountability pays off,” Jim Duffy, Ally’s chief HR officer, recently told i4cp.
Rewarding the Opposite
As you know, having a robust talent mobility program can lessen the chances that high performers will leave. It also helps companies build strong and sustainable leadership pipelines for the future.
Yet, a major contributor to talent hoarding is the fact that managers are rarely rewarded for moving individuals to different parts of the operation, says Patricia Dammann, vice president of programs and operations for the Institute of Organization Development, the educational and consulting society based in Fort Myers, Fla.
“This lack of incentive does nothing to foster any accountability to move stars,” she says. Instead, “there’s a big perceived incentive for managers to keep their superstars with them – who wants to give that up?”
To help prevent the inclination toward talent hoarding and enhance star-employee retention, Dammann and the institute recommend these strategy tips:
- Hold managers accountable for moving people outside of their business units.
- Reward those managers that successfully develop others who move up and out of their operations.
- Use a talent review process where senior leaders determine employee readiness for a move outside of their current position.
- Identify the strengths and development needs of each individual and then identify specific development opportunities.
- Identify potential short-, mid-, and long-term career paths.
- Measure talent rotation within each division, business sector and key areas.
- Measure and track the length of time each high potential stays in a position.
- Create a process where high performers are able to present themselves (skills, abilities, accomplishments) to senior leadership for new growth opportunities.
- Be an advocate for employees, seek opportunities to expand their growth and always communicate their successes upward.